Stanbic IBTC, United Capital, ARM lead equity funds performance in 2018


June 13, 2018 | 1:00 am
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BusinessDay year-to-date analysis of the performance of 10 equity funds in Nigeria between January and June 1st 2018, shows Stanbic IBTC aggressive fund topping the gainers chart with a 3.82 percent increase in its unit price, for the period, according to SEC Nigeria data.
Other top gainers include; United Capital asset management Ltd equity fund (+3.22%) and ARM aggressive growth fund (+0.36%). Meanwhile the benchmark of the Nigerian Stock Exchange (NSE) all share index return for the period stood at – 3.73 percent.
On the reasons why the equity funds outperformed the NSE return in the period under review Wale Okurinboye, Head, Investment Research at Sigma Pensions said: “They outperformed the market all share index because they are were not holding DANGCEM at market rate, considering DANGCEM that has 30 percent of the NSE market capitalisation was down 3 percent in that period.  As a result if the overall market was going down theirs would not have not gone in the same direction.”
Tajudeen Ibrahim, Head of Research at Chapel Hill Denham Securities said the equity funds that outperformed the NSE return in that period are most probably exposed to growth stocks.
“These are the kind of stocks that might not necessarily give dividend but their stock prices rally in the back of their growth story and not necessarily driven by dividend payment,” Ibrahim said in a phone response. Other equity funds that outperformed the benchmark include; Stanbic IBTC Nigerian equity fund (-0.13%),  FBN capital asset management (-1%) and AXA Mansard investment Limited (-3.65%).
Johnson Chukwu, Md of Cowry Asset Limited said the basic thing that happens is that, if a fund is actively being managed, the fund managers will invest in assets, they will also be selective in their choice of instruments, and they will invest in instruments that have very strong potential.

“Ordinarily, any good fund manager should outperform the market index because it is a basket of good performers and the lagers will weigh down the entire market index because a portfolio investor will first identify the instrument that qualifies for investment in their portfolio, that is those instruments that have very good fundamentals,” Chukwu said.

The equity funds that lagged the benchmark for the period were: Chapel Hill Paramount equity fund (-4.57%), First City Asset Management plc Legacy Equity Fund (-5.59%), Meristem Equity Market Fund (-6.61%) and SCM Capital ltd frontier fund (-7.22%) making up the worst performing list.

Chukwu further stressed that any fund manager that underperforms the entire market index can be rated as being very weak because there is no fund that includes all stocks on the exchange in its funds or investment portfolio.

“The selectiveness of investors in picking instruments into their portfolio is such that any good portfolio or fund manager should ordinarily outperform the market index, because their choices will be largely be on the good performers,” Chukwu added.

On whether or not Nigeria’s economic macro indictors influenced the performance of the funds analysts surveyed by BusinessDay said macro-economic indicators affect every stock because it is macro and as such it affects the economy. So the key thing is stock selection.

“On the macro factors it will have generic impact on the entire market so those that performed well were exposed to growth stocks,” Ibrahim of Chapel Hill Denham Securities concluded.

An equity fund is a mutual fund that invests principally in stocks. It can be actively or passively (index fund) managed. Equity funds are also known as stock funds. Stock mutual funds are principally categorized according to company size, the investment style of the holdings in the portfolio and geography.

The sizes of an equity fund is determined by a market capitalization, while the investment style, reflected in the fund’s stock holdings, is also used to categorize equity mutual funds.

Stanbic IBTC Aggressive Fund, United Capital Equity Fund and ARM Aggressive Growth Fund had a net asset value of  N512.65 million , N1.42 billion and ARM, N3.1 billion respectively, as compiled from latest Security and Exchange Commission (SEC), data.

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June 13, 2018 | 1:00 am
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